CBO AGREES SOCIAL SECURITY IS IN TROUBLE
June 15, 2004
The nonpartisan Congressional Budget Office (CBO) has released a new report that documents how Social Security under current law is on an unsustainable course. The report projects slightly smaller future deficits. Opponents of proposals to fundamentally reform Social Security are heralding it as evidence that such action is not needed. But experts from the National Center for Policy Analysis (NCPA) say they misunderstand the import of the report's findings.
Even if the CBO projections are correct, and the deficits racked up by Social Security do not grow quite as fast as the Trustees predict, the government will still have to find a new way to fully fund promised benefits by 2019, says NCPA Senior Policy Analyst Matt Moore.
The impact on taxpayers will be huge:
- The CBO report projects Social Security revenues will no longer be sufficient to fund all promised benefits beginning in 2019 -- only a one year delay over the Trustees' projection of 2018.
- The CBO report projects a long-term deficit that is approximately 20 percent smaller than the program's Trustees' projection of a $10.4 trillion unfunded liability.
- This means, barring fundamental reform, that the government will need to raise taxes, slash benefits or significantly increase the debt to keep its promises to retirees -- even under CBO's slightly smaller projections.
The NCPA notes the disparity between CBO's projections and those of the program's Trustees, results from different economic forecasts and methodology. Employing these alternate assumptions, CBO predicts smaller future benefit obligations, which in turn create the smaller deficits.
No one should be celebrating CBO's report, says Moore. It merely confirms what we already knew: The problem is real, it is huge and we'll begin feeling the pinch sooner than anyone wants to admit.
Source: Press Release, "CBO Agrees Social Security is in Trouble," National Center for Policy Analysis, June 14, 2004; see also "The Outlook for Social Security," Congressional Budget Office, June 2004.
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